What most sellers do not know about seller financing!

Nov. 18, 2010 - PRLog -- The Real Estate market is so slow that it seems to have come to a standstill. The number of houses for sale and the average Days on the Market are much higher as they have been in the past years. I talk to a lot of home owners who are struggling with selling their houses. Most of them tried to sell it themselves for a few weeks, and then they listed it with a realtor for 3 to 6 months. The listing expired because the real estate agent could not get it sold. Then they either try it again themselves or simply give up the hope that they can get it sold. Even worse, if they need to move because of personal reasons, they often end up making double payments which costs a lot of money or people end up losing their house to the bank if they can’t afford to make the payments.  

Hello everyone. My name is Frank Janssen, a local real estate investor who specializes in creative solutions such as seller financing. A lot of home owners are not able to move on with their lives because the market is holding them back. But there are options. The purpose of this article is to educate homeowners about their options. You can still sell your house in this market and move on with your life!

The market thrives on supply and demand. Most buyers and sellers are used to the traditional way of buying a house, and that’s with a new purchase money mortgage or with cash. But there are two things going on in this market. There is an increased inventory of houses for sale due to the foreclosure boom and the banks are changing their lending guidelines to prevent what happened in the past years. So the fact of the matter is that the number of houses for sale is increasing and the number of qualified buyers is reducing. As a result these few qualified buyers have a lot of houses to choose from. They are in control. They look for the best deal in town. Meaning a house in excellent condition for the lowest price they can get.

Well, this happened in the 80’s also. Back then it lasted for years and it took a long time for the market to recover. A lot of factors will play a role in any rehabilitation. My personal expectation is that it will take years for the market to turn around. Sellers have to realize that money is tight and will be tighter. Qualified buyers will remain minimal in existence. But the good news is that the sellers have alternatives, such as seller financing.

What is seller financing?
If a seller finances the buyer, for the entire purchase price or any part thereof, by using the existing financing and/or the equity in his house, that’s seller financing. This results in a win-win scenario. The seller will be able to sell his house and the buyer is able to buy a house without bank qualifying.  Most owners have a lot of questions about this. These are the most common ones:

What are the advantages for a seller to do seller financing?  The seller has a lot of advantages. Let me summarize them:
1.   The seller can sell quicker
2.   He/she has more buyers to choose from
3.   He/she will save on closing costs
4.   He/she can sell for a higher price
5.   He can do a wrap around mortgage and make money on the banks money
6.   He can create a yield on his equity
7.   He can take other property for a down payment
8.   It is easier to do an exchange
9.   He is more creative and flexible
10.   He can use cross collateralization
11.   Easier to do Blanket or Package mortgages
12.   He can close quicker

What are the advantages for the buyer?
1.   No bank qualifying
2.   Low closing costs
3.   Flexibility from the seller

Does the seller need to have a lot of equity?
No, not all. Most sellers think they need to have equity in order to be able to do seller financing. But this is not true. You can even do seller financing when you have little or no equity. That’s the best part of it.

Does the house need to be in good condition?
No, the seller can finance his house in almost any condition. It doesn’t matter if there are no repairs, minor repairs or major repairs. However if the house needs a lot of repairs, the seller and/or the buyer might want to obtain financing to fix it up, but that’s not a problem if you set it up correctly.

Which documents will there be used when a seller sells his house with seller financing?
Well, first the buyer and seller will write a purchase agreement. The title company will be able to assist them with this process if necessary.  Further there will be a loan document or promissory note and a deed of trust or mortgage.

How is the seller secured in the event of default by the buyer?
It is very important to make use of a title company when you sell your house. I would strongly recommend to never close on a property sitting at the kitchen table. In the interest of the buyer and the seller, you have to use a Title Company. The seller is secured by either a Deed of Trust or by Real Estate Contract for Deed. The best will be to consult your title company for this.

For more information about seller financing, sellers who are considering selling their house with seller financing, can contact us through the following website: www.CashHomeBuyers.com or simply call ph# 816-359-3337. If you have questions feel free to contact us, without any obligation whatsoever.

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We understand that life gets complicated - divorce, relocation, debt, bad credit, loosing a job, or lack of extra cash.All these issues can affect your life fast. We can help whether you need to sell your property or are looking for a new home.